Supplier of Last Resort (Solr)
A Supplier of Last Resort (Solr) is a third party appointed by the Office of Gas and Electricity Markets to provide supplies to customers of an insolvent supplier. The main objective of the Solr is to ensure that the service is as seamless as possible. This type of business can be a sales division of a vertically integrated undertaking. To be a Solr, a Supplier must meet the unbundling requirements of the Supply Licence.
In most countries, the term “supplier of last resort”
is used when a supplier goes bankrupt. In 50% of countries, the incumbent supplier is considered the last resort supplier. The regulator is free to choose the Solr as long as it follows a predefined framework in setting its prices. The ACER/CEER report found that the cost of Solr is the same or higher than it was before.
A supplier of last resort should be able to demonstrate
its ability to secure enough electricity and gas to provide electricity to customers at any time. It must also show that it is willing to repay the credit balances of its failed predecessor. As a result, the supplier must demonstrate that it can meet this obligation. A new provider must consider the commercial attractiveness of assuming the customers of the previous supplier. It is important to note that this type of business is not suitable for every supplier.
The supplier of last resort must be able to demonstrate
that it can secure enough gas and electricity to meet the customer’s needs. The new provider must also demonstrate its willingness to pay off any credit balances with the failed supplier. Depending on the circumstances, a new provider may not be able to take on the customer. Once this has been determined, the process of appointing a Supplier of Last Resort begins.
In addition to gas and electricity
a supplier of last resort may also supply electricity. These providers are obligated to honor credit balances with a failed supplier. If a supplier fails to deliver, the new provider will charge customers for their energy. This process is often a hassle for the consumer, but it is an important step towards protecting consumers. If a former supplier fails to meet its obligations, it could cost them money.
A supplier of last resort must show
that it can secure enough gas and electricity to meet the customer’s needs. In addition, the supplier of last resort must also be willing to reimburse any credit balances with a failed supplier. The supply of last-resort must also be commercially attractive for the new provider. It should be considered a last-resort option for electricity and gas providers. When a provider of a third-party energy supply is chosen, the company will be responsible for the cost of supplying the electricity to the customer.